Twenty years ago Microsoft held the top spot among the Northwest's leading companies. This year, Starbucks takes its turn in the annual ranking based on financial performance.
Public companies that survived the Great Recession are, as writer Ernest Hemingway would put it, strong in the broken places. Some are enjoying a more robust performance than ever and those based in the Northwest are no exception.
Starbucks pulled off a turnaround despite the worst economy since the Depression. Alaska Air Group came out of a decadelong makeover to post record profits last year. F5 Networks stockholders enjoyed a ride that took their shares up nearly 146 percent. Amazon.com brought in more than $1 billion in profits for fiscal 2010 despite worried consumers.
These are the top companies in the latest Seattle Times Best of the Northwest ranking. The survey of financial performance marks its 20th year.
With only a few exceptions, the best Northwest companies share some attributes. Among them are global reach, nimbleness, mastery of their core business and strong leadership.
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Many entered the Great Recession in decent shape, navigated it with skill and emerged stronger. Attracting and retaining top talent is another common denominator.
And high-tech is no longer a sector — it’s an essential tool at even the grittiest manufacturers.
It also says much about the Pacific Northwest economy and how it has evolved since 1991.
“The most obvious change is the effect of globalization and especially the rise of the emerging economies,” said Michael Parks, editor emeritus of Marple’s Northwest Business Letter.
” Twenty years ago, the subjects and concerns were primarily domestic, often just regional,” he said. “Now every wheat farmer knows how that upset in Egypt affects his or her outlook and income. Companies know only too well that they must compete with the China price.”
Such prowess is on display at Expeditors International of Washington, whose home base is in a downtown Seattle skyscraper but whose freight-forwarding business spans the globe. Making the top 10 of the Best of the Northwest eight times, and placing 14 times in the top 20, only Microsoft and Starbucks come close in overall performance.
To Expeditors Chief Executive Peter Rose, who describes his company as “a travel agent for freight,” that’s no accident.
It’s “our culture. … It’s magical. You can’t touch it or feel it or smell it. It’s either there or it’s not.”
Expeditors saw record results in 2008. When the recession hit the next year, business plunged more than 20 percent. But the company didn’t impose layoffs; it merely froze hiring. Employees appreciated it.
“How could one get criticized for that? We did by Wall Street,” Rose said, muttering “expletive deleted.” But he credits this retention of talent and boost to morale among its nearly 12,900 employees with Expeditors’ rebound to its best year ever in 2010.
Expeditors grows only organically: By opening new offices and bringing in new business, instead of the distracting and risky game of mergers and acquisitions. Another move: It also employs locals to run its international offices, instead of sending out American managers. The company has 54 offices in China, and may end up with 70, Rose said.
Diversity is another hallmark of the Northwest’s public companies. Microsoft, which ranked No. 1 in the first ranking, epitomizes the technology sector that the Puget Sound region is known for. So does Flir, the night-vision outfit based in suburban Portland.
But consistent top performers also include Precision Castparts, Schnitzer Steel and truck-maker Paccar.
Parks said, “The region’s strengths are easy: Relatively low-cost and renewable power, export orientation, proximity to the Pacific Rim, a decent lineup of world-class players. Don’t overlook the importance of having the Gates and Allen fortunes headquartered here.”
The Northwest also remains strong in high-quality clusters, including aerospace, software, semiconductors and biotech. According to the Milken Institute’s 2010 State Science and Technology Index, Washington ranked sixth nationally, with Massachusetts No. 1.
“The state recorded an impressive third place in technology concentration and dynamism, fourth in technology science work force, and sixth in R&D inputs,” the institute found.
On the other hand, “Washington was at its weakest in various measures of state appropriations for higher education, and in graduate students in science, engineering, and health sciences.”
This year’s Best of the Northwest points out other weak spots, especially among small banks still struggling from the Great Recession. For example, PremierWest Bancorp and Sterling Financial both suffered double-digit percentage drops in stock price.
Greater challenges lurk largely outside the region but will affect it.
“The Great Recession and its aftermath have changed everything,” Parks said. Federal debt, state and local fiscal crises, the overhang of the housing bust and high unemployment are big threats to growth.
Yet leadership matters, too.
For Rose, the first lesson of corporate leadership is: “Don’t do anything stupid.”
He goes on: “Every CEO says our employees are our most important asset until a better deal comes along. But that’s not why we’re here. My responsibility is the 12,900, but if you treble that when you think of a family of three or four, that’s a heavy responsibility. That’s not to be trifled with.”
You may reach Jon Talton at email@example.com